University of zimbabwe faculty of social studies department of economics
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taku dissertation, taku dissertation
| CHAPTER FIVE SUMMARY, CONCLUSION AND POLICY RECOMMENDATIONS 5.0 Introduction This chapter provides a summary of the study and conclusions drawn from the study. In addition, recommendations for policy and suggestions for further studies are given. 5.1 Summary and Conclusion The main aim of this study was to investigate the responsiveness of tobacco supply to changes in prices in Zimbabwe. Historical time series data for the period 1980 to 2015 were used to estimate the elasticities using the modified Nerlove (1958) supply response model and the OLS approach. E-views 7 statistical package was applied. The model passed all the diagnostic tests and also found significant at 1% level. Short-run technological improvements and institutional factors such as sales quotas were found insignificant. The study found tobacco supply to be positively influenced by expected tobacco prices, population of growers and advances in technology. Expected maize prices and previous output were found to inversely affect supply of tobacco. The short-run and long-run price elasticities of tobacco supply were found to be 0.12 and 0.16 respectively and the short-run cross price elasticity of tobacco supply to maize was found to be 0.35. Hence, the study may reject the hypothesis that supply of tobacco respond to price changes leading to the conclusion that tobacco supply in Zimbabwe is unresponsive to changes in both prices of tobacco and of other competing crops such as maize. Download 0.76 Mb. Share with your friends:
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